T-838-75
Canadian Pacific Limited and Incan Ships Lim
ited (Plaintiffs)
v.
Quebec North Shore Paper Company and Quebec
and Ontario Transportation Company Limited
(Defendants)
Trial Division, Walsh J.—Montreal, April 28;
Ottawa, May 2, 1975.
Practice—Jurisdiction—Motion by defendants for leave to
file conditional appearance objecting to jurisdiction and for
stay of proceedings—Plaintiffs maintaining jurisdictional
issue should be determined by trial judge hearing case on
merits—Whether conditional appearance to contest jurisdic
tion necessary when question is whether Court has jurisdiction
ratione materiae—Federal Court Act, s. 22(2)(i), 23.
Defendants, who contend that the proceedings constitute an
action for breach of contract, and are outside the Court's
jurisdiction, move for leave to file a conditional appearance to
object to jurisdiction, and for a stay of proceedings to allow for
disposing of the objection. Plaintiffs claim that a conditional
appearance to contest jurisdiction is only necessary where the
issue is whether the Court has jurisdiction ratione personae,
and not whether it has jurisdiction ratione materiae, which
question can be resolved at any stage.
Held, allowing the conditional appearance, and staying the
proceedings, there is nothing to indicate that the jurisdiction of
the Court ratione materiae can not and should not be raised by
such a motion. Defendants have a right to raise the matter at
this stage; it is within the Court's discretion and deciding
factors should be desirability and expedience. It is undesirable
that an action should proceed to a lengthy and costly trial, and
then be dismissed for lack of jurisdiction. Serious doubt as to
jurisdiction should be resolved as soon as possible; here there is
sufficient doubt to justify determination of the question in
advance of the trial.
Mulvey v. The Barge `Neosho" (1915-20) 19 Ex.C.R. 1,
considered.
MOTION.
COUNSEL:
A. Gadbois for plaintiffs.
L. A. Poitras, Q.C., and M. Cuddihy for
defendants.
SOLICITORS:
Gadbois, Joannette & Durand, Montreal, for
plaintiffs.
Laing, Weldon, Courtois, Clarkson, Parsons,
Gonthier & Tétrault, Montreal, for
defendants.
The following are the reasons for judgment
rendered in English by
WALSH J.: Defendants move for an order for
leave to file a conditional appearance for the pur
pose of objecting to the jurisdiction of this Court,
and for a stay of proceedings to allow such objec
tion to be raised and disposed of.
Plaintiffs contest this motion contending that
the granting of same is a matter within the discre
tion of the Court and that in the circumstances of
this case the question of jurisdiction should not be
decided on a preliminary motion but should be left
for determination by the trial judge hearing the
case on the merits.
Without going into the merits of the dispute on
the question of jurisdiction which will be dealt
with by the Court on a preliminary motion in the
event that permission to file the conditional
appearance is granted, or alternatively by the trial
judge hearing the case on the merits in the event
that such permission is refused, it can be stated
that the litigation arises out of a series of contracts
entered into between plaintiffs and defendants.
Plaintiff Canadian Pacific Limited wished to pro
vide for through carriage of newsprint shipped by
Quebec North Shore Paper Company for a period
of fifteen years from Baie Comeau, Quebec to
New York and Chicago in the United States of
America, as well as to provide warehousing and
further transportation by truck in New York. This
newsprint was to be transported by ship from Baie
Comeau to Quebec and thence by rail to its desti
nations in the United States. Defendant Quebec
and Ontario Transportation Company Limited
with plaintiff Incan Ships Limited formed a joint
venture for the operation of a specialized ship
called a rail transporter, the construction of which
had already been contracted for by Incan, and to
lease a sufficient number of newsprint railcars to
transport the newsprint. Plaintiff Mean was .to
construct and operate a railcar terminal in the
City of Quebec to be available on May 15, 1975
and defendants were to construct and operate a
railcar marine terminal at Baie Comeau to be
ready by the same date. Quebec and Ontario and
Mean agreed with Canadian Pacific to operate the
rail transporter on its behalf, which cargo would
be solicited by Canadian Pacific and carried by it
on a through bill of lading. Allegedly, Canadian
Pacific has taken the necessary steps to provide for
warehousing and trucking of the newsprint in New
York as of May 15, 1975 and Incan is in the
process of constructing the rail terminal in Quebec
and has ordered 175 newsprint railcars for the first
year of operation which are now being built, as
well as 225 additional such cars for use between
May 15, 1976 and May 14, 1990, but neither of
the defendants has commenced the construction of
the railcar marine terminal at Baie Comeau so
that it cannot become available as required by
May 15, 1975. Damages are claimed in the
amount of $35,987,385 with interest at 10%.
Plaintiffs' counsel states that when the question
of jurisdiction is argued it will be contended that
this Court has jurisdiction under section 23 of the
Federal Court Act, the contracts themselves con
stituting "undertakings connecting a province with
any other province or extending beyond the limits
of a province" and, alternatively, under section
22(2)(i), the action being a "claim arising out of
any agreement relating to the carriage of goods in
or on a ship or to the use or hire of a ship whether
by charter party or otherwise". Defendants for
their part will contend that proceedings constitute
an action for breach of contract, specifically the
failure by defendants to construct the marine rail-
car terminal at Baie Comeau by the appropriate
date and hence that they should be instituted in
the Superior Court of the Province of Quebec and
that this Court has no jurisdiction over the subject
matter of the proceedings.
Without in any way prejudging the issue, it
appears to me that this is a very serious argument
which defendants have every right to raise.
Plaintiffs' counsel contends that a conditional
appearance to contest the jurisdiction of the Court
is only necessary when the question to be raised is
whether the Court has jurisdiction ratione per
sonae but that when the question is one of jurisdic
tion ratione materiae, this can be raised at any
stage of the proceedings and will be raised by the
Court itself so that the failure to raise it by
preliminary objection does not constitute a waiver
of this right or an acceptance of the jurisdiction of
the Court. I have examined the jurisprudence and
authorities to which counsel referred and in par
ticular Johnson: Conflict of Laws, 1937 ed., vol. 3,
page 605, and the case of Mulvey v. The Barge
"Neosho"' which supports this proposition. I can
find nothing to indicate, however, that the jurisdic
tion of the Court ratione materiae cannot or
should not be raised by a motion such as the
present one seeking leave to file a conditional
appearance in order to raise the question of juris
diction ratione materiae on a preliminary motion.
Defendants have chosen to raise this issue at this
stage of the proceedings as they have the right to
do, even if the failure to do so might not have
prevented them from raising this issue at a later
date. Since the matter is within the discretion of
the Court, the desirability and expediency of pro
ceeding in this matter should be the deciding
factor.
Counsel for plaintiffs contends that the primary
objective of the contract was for shipment of mer
chandise partially by water from the Province of
Quebec to the United States of America, and that
in view of the very large amount involved in the
action and the continuing damages, it is urgent
that it should be heard on the merits at the earliest
possible date. He suggests that a decision that this
Court does not have jurisdiction would undoubted
ly be appealed right through to the Supreme Court
and that if the final holding sustains this Court's
jurisdiction there would be considerable delay
before the action on the merits could be heard and
the result of that judgment might well lead to a
further appeal in the Supreme Court, whereas if
the question of jurisdiction were left for the trial
judge to decide after hearing all the evidence,
there could then only be at most one such appeal. I
cannot adopt this argument. It appears to me
' (1915-20) 19 Ex.C.R. 1.
highly undesirable that an action should proceed
to a lengthy and costly trial at the conclusion of
which the Court may dismiss same for lack of
jurisdiction. If there is any serious doubt about the
jurisdiction of the Court this should be decided as
soon as possible, and in the present case there
certainly appears to be sufficient doubt to justify
defendants seeking to have this question deter
mined in advance of the trial on the merits. I dô
not find that defendants' motion is frivolous or
made solely with a view to delaying the proceed
ings. It should therefore be granted.
ORDER
Defendants may file a conditional appearance
for the purpose of objecting to the jurisdiction of
this Court and the proceedings herein shall be
stayed until such objections have been raised and
disposed of. Defendants shall file such conditional
appearance and move for a hearing of their objec
tions on a regular motion day within thirty days
from this order or such further delay as the parties
may agree to, or may be fixed by a Judge of this
Court.
In view of the contestation, costs of this motion
are in favour of defendants.
You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.